Cover Story: Rising to the Challenge of the Outsourced Supply Chain

Five success factors for outsourcing your supply chain


For example, Meyer believed going into the relationship with Plexus that, given the complexity of the SafeScout — about 80 percent of the parts on the product's bill of materials (BOM) are custom built-to-drawing, built-to-spec parts — and the level of engineering change that could be expected in bringing a new product to market, SafeView should initially handle prototype materials buying, again to help keep the "churn" out of the relationship with Plexus. Meyer was up front with the EMS, from an early stage, about her plan to hire a new product introduction (NPI) buyer to handle this process. Plexus would have preferred that the operation be entirely turnkey, but Meyer's frank dialog with them on this aspect helped them understand SafeView's point of view from the initial phase of the relationship. So when SafeView hired the NPI buyer, and the buyer began sourcing prototypes and then handing the identified suppliers off to Plexus, the EMS was fine with the process. "They understood that's the way we had to do it," Meyer says. "And I promised them that once we got through the process and the product was stable, I would hand it over to them, turnkey. But if I had not communicated with them, it could have had an impact on our ability to get through that first part of it and now move into production with a very healthy relationship."

4. Put the Tools in Place Early With communication a top priority and a precondition for maintaining the kind of healthy relationship that Meyer sought with her company's supply base, she says that she recognized early on that SafeView would need to put in place the necessary tools that would enable the required level of interaction between the OEM and its outsourcing partners. But SafeView also wanted to ensure that it had the technology in place to protect its intellectual property even as it worked collaboratively with its partners to develop and produce the SafeScout security portal. "I had originally thought that one of the advantages of outsourcing is that you could leverage the tools that your CM already has," Meyer explains. "But I realized fairly quickly that that was a risky proposition, to have your whole product documentation package managed by your CM, just in case things didn't work out and you needed to take the product elsewhere."

At the time, Meyer's technology options seemed quite limited. "I didn't have an IT group. I didn't have an IT infrastructure. I didn't have a database. I didn't have anything with which to work. We had our laptop computers, and that was it," she says. Moreover, SafeView's leadership knew that once they got their first round of funding, they only had 12 months to bring their product to market, so they would have to hit the ground running and could not afford to invest months building an IT backbone and deploying complex software packages.

While reviewing potential software packages, Meyer came across a company called Arena Solutions (formerly known as bom.com), which offers a Web-based, "on-demand" product lifecycle management (PLM) solution. The Arena PLM solution seemed ideally suited for a start-up outsourced manufacturing model, since it allowed an OEM to give any number of outsourcing partners controlled access to online BOMs using nothing more than a Web browser. Meyer initially thought that she would have Arena PLM be the platform for her internal engineering staff to work with the development staff at Plexus, including for part numbering, but the CM already had its own tools in place, and Meyer was unwilling to force a change in Plexus' processes because of the tight timetable for moving the SafeScout into Beta production. Instead, she began using the Arena solution to build the Beta BOM, loading design specs, drawings, instructions and digital pictures into the system and making them available to Plexus' production staff on the manufacturing floor who were building the prototypes. In this way, SafeView maintained control over the documentation package for the SafeScout while giving production staff access to the latest design information.

Once SafeView got its second round of funding, had put Beta units out into the field and started down the path of redesigning the product, the company expanded its use of the Arena PLM solution. By this time, SafeView had assembled its supply base, with seven key suppliers, mostly based in the U.S. Northwest so that they could do just-in-time and a Kanban material pull in conjunction with the Plexus production facility outside Boise. With SafeView's engineers acting as filters for all the design changes coming back from customers, the company's internal staff used Arena to build revised BOM structures and then released the design to the suppliers and, in turn, to Plexus.

Michael Topolovac, CEO and founder of Arena Solutions, points to the advantages of implementing PLM tools at the start of the development process, rather than waiting until a product is already headed for the plant floor. "What SafeView realized early on was that, starting from ground zero, PLM naturally becomes part of the institution and the culture, and all the data's clean from Day One," he says. "If you do everything manually up until the day before you want to ship, then you're going to discover when you try to actually get that data into a tool like Arena PLM that a lot of the data are wrong or they're not complete. PLM is really what enables you to get that product to production."

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